Shareholders' EquityCommon shares.Contributed SurplusRetained Earnings..Total Shareholders' Equity .15,00055,00025,00095,00015,00061,75010,00086,750Total Liabilities and Shareholders' Equity225,000210,000All of Outland's sales are on credit. The company gives customers 60 days to payaccounts receivable. Industry average days to sell inventory is 50 days. Competitorsto Outland typically generate a 6% return on their assets.Outland had the following ratio results in 2019:Gross Profit Margin - 39%Days to Collect Accounts Receivable - 78 daysCurrent Ratio - 1.44Days to Sell Inventory - 107 daysQuick Ratio - 0.89Return on Assets - 7.1%Instructions1) Comment on the 2020 financial performance of Outland Corp. using ratios interms ofa) Liquidityb) Activityc) ProfitabilityHint: You should calculate 2020 ratios for those that Outland calculated in 2019,and then interpret them.2) Would you invest in this company? Why or why not? The following are the comparative financial statements for Outland Corporation for2020 and 2019:OUTLAND CORPORATIONStatement of IncomeFor Periods Ending October 31Sales RevenueCost of Goods SoldGross Profit..2020167,500100,00067,5002019140,00085,00055,000ExpensesDepreciationSelling and AdministrativeInterest Expense.Total Expenses.15,00022,50015,00015,00047,50035,000Net Income (before taxes).Income Taxes25,00010,00015,00022,5007,50015,000Net IncomeOUTLAND CORPORATIONStatement of Financial PositionAs at October 3120202019AssetsCurrent Assets:4,00010,00035,00031,00080,000Cash.2,5007,50030,00025,00065,000Marketable Securities.Accounts Receivable.InventoryTotal Current AssetsInvestments (at cost)..30,00032,500Property, plant and equipmentProperty, Plant and Equipment..Less: Accumulated Depreciation.200,00087,500112,5002,500225,000190,00080,000110,0002,500210,000GoodwillTotal AssetsLiabilities and Shareholders' EquityCurrent Liabilities:Accounts PayableNotes Payable.12,50025,00020,00057,50010,00020,00015,00045,000Accrued and Other LiabilitiesTotal Current Liabilities.Non-current Liabilities:Bonds and Notes Payable.Total Liabilities72,500130,00078,250123,250Shareholders' EquityCommon shares.Contributed SurplusRetained Earnings..15,00055,00025,00015,00061,75010,000

1.Comment on the 2020 financial performance of Outland corp using ratios in terms of (a) Liquidity…

Answered: Gross Profit Margin - 39% Days to…

Gross Profit Margin - 39% Days to Collect Accounts Receivable - 78 days Current Ratio - 1.44 Days to Sell Inventory - 107 days Quick Ratio - 0.89 Return on Assets - 7.1%

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 19BEA

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Selected comparative financial statements of Korbin Company follow. KORBIN COMPANY Comparative Income Statements For Years Ended December 31 2021 2020 $ 442,035 $ 338,635 266,105 214,695 123,940 46,732 29,800 76,532 47,408 9,719 Sales Cost of goods sold Gross profit! Selling expenses Administrative expenses Total expenses Income before taxes Income tax expense Net income Assets Current assets Long-term investments Plant assets, net Total assets Liabilities and Equity Current liabilities Common stock Other paid-in capital Retained earnings KORBIN COMPANY Comparative Balance Sheets Sales Cost of goods sold Gross profit Selling expenses Administrative expenses Total expenses Income before taxes Income tax expense Net income Assets Current assets KORBIN COMPANY Common-Size Comparative Income Statements For Years Ended December 31, 2021, 2020, and 2019 2021 2020 Long-term investments Plant assets, net Total assets 175,930 62,769 39,783 102,552 73,378 13,648 $ 59,730 $ 37,689 Liabilities and…
Selected comparative financial statements of Korbin Company follow. Comparative Income Statements For Years Ended December 31 Sales Cost of goods sold Gross profit Selling expenses Administrative expenses Total expenses Income before taxes Income tax expense Net income KORBIN COMPANY Assets Current assets Long-term investments Plant assets, net Total assets KORBIN COMPANY Comparative Balance Sheets Liabilities and Equity Current liabilities Assets Current assets Long-term investments Plant assets, net Total assets 2021 2020 2019 $ 483,981 $ 370,769 $ 257,300 291,357 234,326 164,672 192,624 136,443 92,628 68,725 33,964 43,558 21,356 112,283 80,341 14,943 $ 65,398 $ 41,856 Liabilities and Equity Current liabilities Common stock Other paid-in capital Retained earnings Total liabilities and equity December 31 2021 $ 57,843 0 51,166 32,628 83,794 52,649 10,793 $ 23,890 66,000 $ 20,253 Common stock 66,000 Other paid-in capital 8,250 Retained earnings 41,423 Total liabilities and equity $…
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